Taxation (Budget Measures) Bill (No 3)

I move, That the Taxation (Budget Measures) Bill (No 3) be now read a third time.

As we have traversed in the hearing of this bill already over the last day or so, we have seen that this bill introduces a number of practical reforms focused on simplifying our tax system, strengthening integrity, and supporting economic growth. For the benefit of the House, I’ll provide a quick overview of the bill.

The bill introduces a maximum threshold of $100,000 on gifts qualifying for the donation tax credit. We want to continue to support the work of the charitable sector, but we must ensure that that support is targeted and represents the best use of taxpayer money.

The bill also proposes an income tax exemption that ensures non-resident contractors’ tax is no longer payable on the dry leasing of aircraft and parts. This ensures that non-resident contractors’ tax will no longer be an obstacle to airline operators in New Zealand accessing leased aircraft and parts from offshore suppliers. It will also support our aviation sector, improve access for passengers and freight, and help ensure that our tax system supports rather than hinders productivity.

The bill also contains changes that tax a company’s shareholder on an outstanding loan from the company six months after it is removed from the Companies Register. The proposals were designed to minimise the impact on existing loans or ordinary practices where company drawings are used to manage cash flow.

Finally, the bill gives effect to simplification changes to the Working for Families scheme, including removing low-risk adjustments from the calculation of family scheme income and simplifying the resident requirements. These changes will make it easier for Kiwi families to get the entitlements which they are eligible to receive, reducing compliance burden, reducing process and bureaucracy, and making it simpler for Kiwis.

The contents of this bill strike a balance between simplification, fiscal sustainability, and integrity measures. They provide sound, careful, measured, and considered support for New Zealand businesses and New Zealand families. I would like to thank the IRD and Treasury policy officials, in particular, who drafted this work, and for their hard work in bringing this bill to its third reading. I’d like to acknowledge the IRD private secretaries and ministerial advisers for their work on the Budget process. We have just on 4,000 men and women who work for the New Zealand Inland Revenue Department across New Zealand, including in my home electorate of the North Shore. As your Minister, the Minister of Revenue, I am very proud of your contribution that you make to our country, and the work that you do. It is with considerable pleasure that I commend this bill to the House.

I want to begin by acknowledging the very last remarks the Minister of Revenue made about the sterling work done by the staff at Inland Revenue. They’re a great team. I wanted to especially acknowledge the policy team there, who are people of great integrity who work hard to keep our tax system in shape. They all do a fantastic job, and I trust that they will all be retained in their employment in the next few years. As has been well signalled and is contained in the Budget documents, Government departments are expected to reduce their costs, and that means jobs. I trust that all those excellent people at Inland Revenue will actually be retained in their jobs.

This Budget has been a disappointing Budget. It’s a Budget which was much hyped, but it is a Budget of gaps, and this particular tax bill in many ways symbolises those gaps. In terms of the gaps in the Budget, there’s a whole lot of gaps around support for people who are doing it tough. We know that things are tough out there at the moment. We know that there is increased pressure on food banks. We know that even families in work are having to go to food banks. Yet there is nothing in this Budget to support those people. We know that many Public Service entities are struggling to provide the services they need. There’s nothing in this Budget for those people. We know that the health sector is under pressure; there’s been some money allocated to the health sector, but we know that there are still massive problems on the front line. This Budget is remarkable not so much for what it does do as for what it doesn’t do, and this tax bill is remarkable in many ways for what it doesn’t do as much as what it does do.

There are a number of measures contained within this tax bill—four or five measures within it, really. On the whole, we support those measures. The Labour Party will be supporting this tax bill at the third and final reading. Let’s go through some of those measures. The work that is being done on loans to shareholders and loans to directors and associated persons: it has, historically, been a way of transferring value from a company to the shareholders or directors of that company, and, over time, through some tax structuring, avoiding paying tax on that transfer of value. It was a rort and it is a rort that needs to be stopped. Although, perhaps, we might not have gone about it in the same way as the bill does, it is, nevertheless, a good measure and a measure that needed to be taken. We support that particular measure.

The work around Working for Families is interesting. Calculating Working for Families tax credits is difficult. It’s complicated. There are a number of inclusions and exclusions from net family income—some of them which, really, have only the smallest impact on the Working for Families tax credits that the person may be entitled to. It made the process of claiming them unnecessarily complicated, and, at times, because it was so complicated, it resulted in people inadvertently owing money on Working for Families tax credits they shouldn’t have had in the first place, which created further stress. That work, contained in this tax bill, to tidy up some of that calculation there is very welcome, and we support those measures.

I remain concerned about the use of income equalisation accounts around claiming Working for Families tax credits, but I’m sure that it is a measure that the excellent staff at Inland Revenue will be keeping an eye on, and, if necessary, that can be adjusted again at some stage in the future because, of course, our tax law is always under review. That was a good measure.

The work on aircraft leases is a little bit technical and it does mean income forgone by the New Zealand Government, but it does seem to be a sensible measure which, even though it is going to cost in terms of revenue forgone, it will actually, overall, enhance the New Zealand economy. Again, a sensible and good measure, which we do support.

In terms of the donations tax credit, that is a little bit more vexed. There was a problem in this space—there is a problem in this space—with people, again, through pretty aggressive tax structuring, using donations to charities to really shelter income and to force it out in different ways. That is inappropriate. The way that this Government is moving on it is by removing the tax credit for donations over $100,000. Now, that’s a good move, but the difficulty is that it may not actually solve the central problem. People can still make substantial donations to charities and can still aggressively tax structure in order to shelter income in that way. That problem remains even though part of the incentive for it is gone. We’re also concerned that removing that incentive will have a chilling effect on the amount of donations that are received by charities. Again, right at the moment, charities are struggling to provide; they are receiving fewer donations. In particular, I am concerned about, in these tough times, when charities like food banks are doing their best to support people, the very fact that this donation credit being capped may have a chilling effect on the amount of donations that are received, even though those donations fall below the new limit.

We support this measure in terms of the way it is acting to remove some of the incentive for tax rorts, but we note a real caveat: we will want to see that this is actually working as intended, that it does not chill the sector, that philanthropy still continues. So it will need to be up for review. Those are the measures we support, but this is a Budget of gaps, and those gaps show in this tax bill.

As previously canvassed in earlier stages of this debate, Inland Revenue has a whole set of information sheets up on their website. Ministers made announcements yesterday about measures that are contained in those information sheets, but those measures are not in this tax bill. One of the measures that was announced yesterday was some interesting changes around the fringe benefit tax rules. Now, these look like interesting and good changes to me. What they will do is make it much, much easier for people and for businesses to work out how much fringe benefit tax is payable on vehicles. Instead of characterising vehicles by the type of vehicle, which can be complicated—rules around cars and trucks and utes and this, that, and the other—instead, it will look at the purpose for which a vehicle is used and calculate fringe benefit tax accordingly. Now, that is a sensible change. This morning we’ve had tax partner at Deloitte, Robyn Walker, who’s much respected in the tax community, heralding that change. But it’s not in this tax bill.

Likewise, there have been some changes announced to the foreign investment fund rules, extending the new revenue account method to all taxpayers who derive foreign investment fund income. Now, that is a good and sensible change. When the initial changes to foreign investment fund rules went through in last year’s annual rates bill, one of the calls at the select committee stage was for the method to be extended to all taxpayers. Again, Robyn Walker was hailing that change in the commentary on the Budget this morning, but that measure is not in this tax bill.

There are a whole other series of measures that have been announced but have not been included in this tax bill. One of the interesting ones is around charities and not-for-profits. Now, there is a change in the amount of income that a not-for-profit can receive before it is up for tax—the change has gone from a threshold of $1,000 up to $10,000. That’s quite a significant change. It’s heralded in the information sheet, it was announced yesterday, but it is not in this tax bill.

The challenge remains. There’s only a small number of measures in this tax bill. A whole lot of the measures that were announced have not actually been included. This is a bill of gaps. Just like it is a Budget of gaps, this is a bill of gaps. Mind the gaps.

ASSISTANT SPEAKER (Maureen Pugh): The question is that the motion be agreed to.

The Budget announced yesterday—Madam Speaker? I think my mic’s not working. Oh, there we go.

We saw in the Budget documents yesterday that the Luxon Government is failing on all the things that really matter: child poverty not being reduced; greenhouse gas emissions not being reduced—potentially increased; even on their own target or goal of economic growth, they are failing. It’s because they have made political choices that take money from ordinary working people, disabled people, people living in social housing, and they’ve given it to the big corporates, the landlords, the tobacco companies, the fossil fuel companies. And whatever their slogans—they’re very careful with their slogans: we hear them all through the Budget speeches. We hear the Ministers claiming to be measured, balanced, etc., the reality is they are not, and they’re taking the country backwards at quite a rapid pace. It’s because they’re there to serve the interests of a few: the few that are wealthy and powerful and sorted. But that’s not how we build the country, in Aotearoa New Zealand, that we could have.

When it comes to this particular tax bill, as the previous speaker the Hon Deborah Russell was alluding to, many of the tax changes that were announced in the Budget speeches are not contained in this bill. This is actually quite a thin bill, and it makes some pretty sensible and small changes, but we don’t yet have the legislation to implement the changes that were announced yesterday by the Minister of Finance. The changes in this bill are fine. They go some way to, you know, tweak around the edges. As we’ve spoken to through all of our debates since the bill was first dropped yesterday, the main changes are limiting the amount of tax credit one can claim for donating to charities—and that’s, I think, a reasonable thing to do. In fact, right now, charities are delivering core services that, really, the Government should be funding, and they shouldn’t have to rely on charitable donations in order to be able to deliver the services that help those who are homeless and those that have mental health issues or who are struggling on the streets. I see a lot of charities and I talk to people in my electorate here in Wellington, and they’re struggling. The Salvation Army food bank ran out of food, and that’s because of decisions this Government has made elsewhere in previous Budgets.

The Government has made decisions that have taken money away from ordinary working people, and now people are struggling to make ends meet and then the charities are trying to fill the gap, but they’re not able to, because, on the other hand, the Government is still making cuts to funding those front-line services and those charitable services. But what’s good about the change that’s been introduced is that wealthy people will not be able to use charitable donations to claim tax deductions over a certain amount, and I think that that’s a reasonable change.

The next step that the Government needs to take is to fund the services that are needed so that we aren’t having to rely on charitable donations as much. What we know is that the ultra-rich, the super-rich, actually do not give as much—they don’t. They don’t give as much, and now the whole society suffers as a result.

The next change in this bill is that it is introducing an income tax exemption that ensures that non-resident contractors’ tax is no longer payable on the dry leasing of aircraft. It’s a very technical change. Apparently, allegedly, it’s going to make it easier for us to lease aircraft that might be needed in the short term—fine, whatever. The next change is treating loans by companies to shareholders that remain outstanding six months after the company is removed from the companies register as income, and it is taxed accordingly. That’s reasonable—that’s fine. Then there are some changes to Working for Families which mean that Working for Families eligibility does not cease immediately when a caregiver retires or is temporarily overseas, and it allows exemptions for longer overseas absences when it’s for specified reasons.

All of these are completely moderate and completely reasonable, but, fundamentally, what was in the Budget is not taking us in the right direction. It’s not taking the opportunity to have a much fairer tax system and it’s not ensuring that we’re funding the front-line services that we need, and so we’re seeing homelessness increase, we’re seeing child poverty not reduced but just stubbornly staying at the same level, and all of that costs us in the long run.

We aren’t building public housing anymore—huge mistake. Building public housing is one of the best ways to achieve the outcomes that we would all want as a country, and so is funding social services and ensuring that those people who are doing the really hard mahi like caring for those with disabilities, with special needs, and with mental health and addiction issues are paid properly for their work.

The last Budget was paid for by working women and all people in female-dominated industries not being able to access the pay that they deserve. Not paying them what they deserve makes these less attractive professions, it makes it harder for people to stay in New Zealand to do that work, and it means that they’re less able to make ends meet, and then there’s less of their income being spread around the community—which is actually what is good for our economy, if we can just keep that flowing. When we pay people properly for their work, we will find that there are more people willing to do the work that needs to be done, the people doing that hard work are more able to make ends meet, and that’s good for the local small businesses. That’s the opportunity that was missed in this Budget.

Throughout this, the Green Party has asked a number of questions. During the committee stage, my colleagues were able to dig into the detail of the bill. It still is a bit strange that this is happening through Budget urgency, as opposed to having a proper, full select committee process. It’s unclear why that would be needed for these particular measures. Fundamentally, the Green Party wants to see tax changes that address the fact that our lowest-paid people are overtaxed and are not supported enough through hard times while the wealthiest people in our country are accumulating more and more wealth and not paying their fair share, and that’s not good for any of us. It means that we don’t have the ability to invest in the things that really matter.

💬 Todd Stephenson: Who’s “we”?

The country—the society. I know that the Government doesn’t believe that we’re a society but that we’re just a bunch of random individuals who are competing against each other, and that’s why its economic policies fail.

The economic policies of the Luxon Government, with the ACT and New Zealand First extremist parties, are failing New Zealand, and that’s why we see unemployment increasing. It’s harder for people to find jobs here in New Zealand. Nothing in this tax bill and nothing in the Budget is going to make it easier for people to find jobs. Nothing in this tax bill is going to make it easier for people to struggle with the rising cost of fuel.

Those members are just doing the absolute bare minimum to try and pretend, and then they just repeat ad nauseum “balanced, sensible, fixing the basics, building the future”—it’s all nonsense. Most New Zealanders who I talk to—some of whom were even, like, naive enough to believe National at the last election and voted for them—are seeing through the Government now. They’re seeing that the people pulling the strings are the corporate lobbyists, the big climate polluters, the tobacco companies, and the landlords.

What actually, genuinely increases productivity in this country? It’s the workers. What would be a smart investment? Education. What would be—

💬 Tom Rutherford: More roads.

💬 Grant McCallum: Businesses.

What would—

💬 Tom Rutherford: $4,500 per $1 billion spent on infrastructure.

💬 Hon Dr Megan Woods: Why don’t you guys actually just take a call?

I love being heckled by the ignorant fools on the other side.

I mean, we have only about five months until the next election, and that’s plenty of time, I think, for it to be clear that the Luxon Government has no plan and no vision for the future, but only a vision of “We can dig up our conservation estate for minerals, we can sell off our assets to foreign investors, and we can allow the super-rich to get even richer and exploit workers.” That’s their plan.

Thank you, Mr Speaker. I rise on behalf of ACT to speak on the taxation bill. This is a small but important bill which supports our overall Budget that was delivered yesterday. We’re going to return the Budget to surplus, we’re cutting waste, and we’re investing in what Kiwis care about, and I commend it to the House.

I’m speaking on behalf of New Zealand First to commend this bill to the House. We really, really want to pay a compliment to our National Party colleagues. We’ve heard a lot about the philanthropic sector that’s struggling and may or may not have considered the Active Investor Plus criteria being added to that one. We’re really pleased about that—thank you very much for that. We commend this bill to the House.

Thank you, Mr Speaker. I rise to speak on the Taxation (Budget Measures) Bill (No 3). As my colleagues have already articulated, we will be supporting this bill.

I want to get a little bit philosophical in my speech, and maybe I’m about to do something very dangerous as a backbencher, which is to actually develop some independent thought. I want to talk about one of the things that actually cuts to the heart of this debate, which is: what is the role of the charities and the charitable sector versus the State? I think some members opposite are asking what the relevance is, but, actually, this does come to the heart of it, because this bill does introduce a maximum threshold for gifts and it caps what you can claim back in tax credits if you donate to a charity.

Now, charities have a really important role in New Zealand. I myself have a lot experience, having come from the charity sector. I was born and raised, and still am, a Catholic, and I know that the Church and the institutions associated with it have lot of charitable giving associated with it. When I was at university, I helped found a St Vincent de Paul chapter at my university, the University of Otago. We did things like visit prisoners. We did things like redistribute food that would otherwise have gone to waste. We did things like run op shops. These were all very good and worthy things. Then, after I finished university, one of my first jobs that I took in the capital was working at Caritas, which is a Catholic care and relief organisation.

Now, we’ve heard from the charitable sector, and we’ve heard it really clear, and we’ve heard it right across the country, and the theme that is true that they’ve said and that is being felt consistently across the country is that things are tough for the charitable sector right now. Things are tough because when the economy is tough, people have less to give, and when people have less to give, the charitable sector has less resources. But it’s ironic that, at the time when things are the toughest, the charitable sector has the least amount to give. It’s kind of like a negative doom loop, in a way, because the economy is bad, people have less to give, and the charities have less resources to be able to pass on to people who need them the most.

It is a philosophical debate on what the role of the State should be versus the role of charities. I myself am not a conservative, but a lot of my family and a lot of my community members are conservative, and I’m familiar with the philosophical thinking that underpins conservatism. The steel-man scenario for it, they say, is that the State is unnecessary because good people from the community will self-organise on the ground. It’s kind of distributed in that charities and communities should fill in the void and not be what they deem to be an uncaring, oppressive State. This is a little bit ironic because they are passing a bill right now, which we do support, that actually limits the tax credit that you can get back from giving to charity, so it does have a little bit of a maybe intended—or unintended—consequence of weakening the charity sector a little bit.

I wonder why they are actually passing this bill, which theoretically goes against that sort of narrative of an individual, conservative community which thinks, “Let’s have the charity sector handle it all.” It’s because the Government is desperate for revenue. They’re trying to look under every floor. They’re trying to squeeze every available source for revenue to fund their deficits. We’ve heard members opposite talking about how they’re getting back to surplus, but what they don’t mention is that they’re only getting back to surplus on a fake measure that the finance Minister has developed, a measure that’s actually not been done before: the operating balance before gains and losses, excluding ACC revenue and expenses measure (OBEGALx), which artificially excludes liabilities from ACC, which doesn’t really make sense if you think about it. Again, we do rise in support of this bill. I’ve given a minor philosophical treatise. Thank you for this opportunity.

I’m so inspired after that rant by Julie Anne Genter about looking for jobs. Well, the Budget promotes 220,000 new jobs over the forecast period, and for every $1 billion of capital expenditure, it’s estimated there will be 4,500 jobs, so hurrah to that! I commend the bill to the House.

It is indeed a privilege to follow after the most substantive contribution we’ve heard from a Government backbencher in this entire debate. Ryan, well done! You made 12 seconds.

We are here, finishing the final reading of the centrepiece legislation of this Government’s Budget: the omnibus hodgepodge bill around tax, which had absolutely no need to come through urgency. What we actually have is a number of tax measures that the Government put in the Budget that aren’t even in this legislation. It doesn’t seem that the Minister could actually get his act together to get all those tax changes in this Budget. Throughout this debate, we have been asking: where are some of these other tax changes that are scattered throughout the Budget? The foreign investment fund changes, nada; changes to financial arrangement rules to support migrants, missing in action; non-resident contractors’ tax modernisation, not there; the research and development tax incentive, those changes not there—as I said, probably because their big idea of being able to cash it out you can already do.

Then there’s the fringe benefit changes, and my colleague the Hon Dr Deborah Russell talked about how there’s actually been some commentary that these are some quite good changes. That begs the question: why has this not come before the House? Why is this not part of the suite of legislation? Why is it that we’re debating about the tax treatment of aircraft—a very niche change in the tax legislation? Why are we looking at the lease arrangements for aircraft and the tax treatment of that, rather than debating some of the changes that the Government has brought in? Then, of course, missing in action also are the changes to thin capitalisation rules for foreign-owned banking groups. There are some substantive changes in there. We have no idea when those legislative changes will be coming to the House; how it is that people should be planning—particularly in the case of some of these fringe benefit changes, how it is that people should be structuring their business and structuring what they’re doing; and when these changes are coming.

The fact that this is the centrepiece of the legislation shows that we’ve got a Budget that delivered absolutely nothing for New Zealanders. What we’ve got is more cuts and more pain for some of the most vulnerable people in our communities—

💬 Dan Bidois: Back to the bill.

—and nothing is more emblematic of that than this bill, Dan Bidois. The fact that this is a bill that is in no way connected to the real lives of ordinary New Zealanders and does nothing to help them—what do we see in other parts of the Budget? What we’ve seen in other parts of the Budget are cuts to housing. What we’ve seen in other parts of the Budget are cuts to the things that can make a difference to people’s real lives. We’re seeing a lot of excuses and no real solutions, and the no-real-solutions part of it is utterly embodied by the bill that we’ve got in front of us here. It is not putting people’s jobs, it is not putting people’s health, it is not putting people’s homes, and it is not addressing the cost of living—the things that New Zealanders want to hear about, the things that New Zealanders know will make a difference to their lives. We are not seeing that in this bill.

Now, we are supporting this bill. There are some changes in it that are sensible, including the non-residents providing use of aircraft in New Zealand provisions—that seems sensible. The change that we have, throughout this debate, however, raised some real questions around is around the changes to the way in which charities are taxed. Now, the question as to why this needed to go through urgency is absolutely front and centre. The regulatory impact statement material that accompanied this bill made it clear that there hadn’t been problem definition work—there hadn’t been time for it. There hadn’t been time for consultation. Even a few days at select committee would have allowed us to tease out some of the problems that we raised in the committee of the whole House stage. The Minister did not have an answer for why it had to go through under urgency, and the answer from the Minister of “ ‘cos” doesn’t really cut it. It doesn’t explain to us exactly why that needed to go through as an urgent piece of legislation.

One of the things that we know is that, actually, charities have never been more important in New Zealand than they are right now. It is our charitable sector that is doing the heavy lifting while this Government is failing its people. It is the charitable sector that’s doing the heavy lifting in feeding people, in clothing people, in housing people, and in looking after New Zealanders. It is this sector that is raising some real concerns around what is happening in here. The regulatory impact statement that went with the bill actually provided some really good analysis around charitable giving in New Zealand, about where it fell, and 29 percent of it fell to “other”—which is our community and voluntary sector, our arts sector, our research sector—and these are all sectors that are not being supported by this Government in this Budget. This 29 percent of giving that comes through the charitable sector is so vital to these organisations. My colleague Helen White—and she’ll talk about it in her contribution—has been in communication with a number of organisations overnight who have raised with her some real concerns around these measures and what they are going to be, how they’re going to play out.

Labour is putting on record that this is an aspect of this legislation and this change that we will need to monitor and we will need to make sure is working and is not having a chilling effect on our charitable sector in New Zealand, because we simply cannot do without that giving that comes through to these organisations. That’s something that we want to make abundantly clear, because one of the things that we do know is that when we put something through under urgency, we need to believe that it is going to make a difference.

I think one of the things that is a big question for us is that this is a change that came from the Minister; it wasn’t driven by officials, and it wasn’t driven by the department. So the real question is why, and the only answer to that why that we can come to is you go back one year in time and you go back to Budget 2025, when the Minister of Finance, Nicola Willis, was breathing fire about how she was going to clamp down on the misuse of charities taxation law in New Zealand and charities in terms of how they were shirking their responsibility in terms of the tax system. She was going to go hard on that, and what happened? The Government didn’t actually do that work. They crumbled.

From the fire that the finance Minister breathed at the last Budget, we can only describe this as the faint embers that emerged from that work plan—that it got thrown up there, the Government thought, “Oh God, we’re going to have to do something about charities tax law, because last Budget the finance Minister made such a to-do about it and said she was going to do some work.” That has not eventuated, so we’re going to have to put some ill-thought-out propositions in place that we don’t test properly, we don’t put through a rigorous process, and we don’t see if it’s actually going to work. We don’t talk to the organisations who might say to us, “Look, your analysis says there are 350 people at this top end of giving”—which is what the regulatory impact statement tells us—“but, actually, we can tell you there are more than that.” At that very top end, there is actually a growing sector of people that want to give. Many of them fall within that 29 percent of giving that goes to our community, our NGOs, to our arts, to our research and science organisations, and these are where we need to make sure that we have got that going.

The other concern that’s been raised is that Australia has a much more attractive regime around charitable giving. The concern is that charitable giving in New Zealand might, like many New Zealanders, pack its bags and head to Australia. This could be another example of the Government’s utter success in the “Everyone Must Go” campaign, because it might be that all of our charitable giving at the big end of town packs its bags and moves to Australia along with all our construction workers and tradies, that that’s also transferring over there.

We are supporting this bill, but we are eyes wide open in that there are many things that we will need to monitor. This could be yet another thing that when we are in Government, we could need to come back and fix, because this Government has missed the opportunity to do the real work.

It’s going to be a few years before they’re back in Government. The bill that we’ve been debating, the Taxation (Budget Measures) Bill (No 3), is all a part of this Government’s plan to fix the basics and build the future. I commend this bill to the House.

Oh, look, can I just say that was first equal from the National Party backbench. Mr Bidois also lasted for the full 12 seconds. Well done to the National Party backbench. Well done to them.

I’m just going to get back to the seriousness of this bill, but can I just say that this Government is showing they’re not taking the Budget seriously. As my colleague the Hon Dr Megan Woods pointed out so eloquently a few minutes ago, the Government trumpeted their Budget yesterday as being the answer to all of New Zealand’s prayers, and this is what we’re getting for the very first bill, the Taxation (Budget Measures) Bill (No 3), which, instead of actually talking about all of the things they’re supposedly going to do in the Budget, talks about a whole lot of things that aren’t related to the Budget at all—things that probably could have come through to a select committee. Now, my colleagues Deborah Russell and Megan Woods have listed all of these things, but there are a whole lot of other changes in the bill that aren’t there, around foreign investment, migrants, the non-resident tax threshold, R & D tax incentives—all of these things that are supposedly amazing in the Budget that are not featuring in the taxation Budget measures bill.

What’s also not in the bill, which is the massive missed opportunity for this Government, who had one last opportunity to prove that they were going to do something about the cost of living for working people and for our vulnerable communities—there is nothing for them in this Budget and nothing for them in this bill. I’m going to talk to that a little bit when we’re talking specifically about one of the changes in this bill that other colleagues from my party of Labour and, also, the Green Party have talked about, which is the changes to charitable giving.

I am the spokesperson for the arts for the Labour Party, and, unfortunately, we have been seeing cuts to the arts under this Government. Yesterday, on the same day that we celebrated New Zealand’s most talented musicians, this Government cut $27 million from the arts. I can’t repeat her speech here because, unfortunately, the language is very unparliamentary, which we would expect from this wonderful taonga of New Zealand, but the speech given last night at the Aotearoa Music Awards from Dame Lynda Topp is a must-watch speech for every member of that Government around how the arts community—who represent New Zealand on the world stage, may I say—are feeling at terms of how they’re treated by this Government.

The other community I want to talk to particularly who could face real challenges from these changes around charitable giving are those who provide food support and community support to our communities. I understand my wonderful colleague Helen White will talk to this in a lot more detail in her speech, but there’s one organisation in my community of Nelson that could be on its knees, and that is New Zealand’s oldest environment centre—running for 40 years later this year—the Nelson Environment Centre, of which I was a board member when we began our Kai Rescue programme, which rescues hundreds and thousands of tonnes of food waste, redirects it from landfill. They are going to be closed by the end of this year if they don’t get a funding injection from somewhere. They feed thousands of people in Nelson and Tasman, and there is a massive, growing need.

This Government is doing nothing, and the community stepped up. The community of Nelson is stepping up to support the Nelson Environment Centre, to support the Nelson food bank and all of the charities who are supporting working people—many of the people receiving food support in my community are working people. One of the things in this bill could limit the amount of charitable support that goes to amazing organisations like the Nelson Environment Centre, like our Nelson Community Food Bank. So in the absence of proper Government support and the absence of a proper cost of living package, the community is stepping up.

Where is the support in this Budget? Where is the support in this bill for working people? I see they’ve all got their heads down, and I’m looking forward to another 12-second contribution from a member of the National Party backbench, which I’m sure we’re about to get in a few seconds.

This Government is on its last legs. They will be turfed out in November, because this community of New Zealand can see that this Budget is a dud. It does absolutely nothing for working people, it does absolutely nothing for vulnerable people, and this Government deserves to go.

Oh, I’m going to let the member down: it won’t be 12 seconds—I commend it to the House.

Thank you. I am going to focus on the issue of charities, because it’s the one of most concern to me. I am the portfolio holder in that sector, and last year we had a concerning announcement from Nicola Willis that she was going to look at taxing the entities that were supporting the charities—so, your op shops, etc.

That was something which went through a due process, and out of the end of that due process of talking to the people who really matter in this sector, the proposal was dropped. That was because it went through that process. It was going to backfire on New Zealand to do that, and people got involved and explained that, and those explanations were accepted, and it shows the power of process.

I suspect that if this particular part of this legislation went through due process, we wouldn’t end up with the same solution that we started with, and that is after, as my colleague has said, consulting with those in this area. I have talked to people, this morning and last night, who are working with high-end donors, and I’ve also talked to charities in general and the philanthropic organisations that are so key to actually holding up New Zealand at the moment, which is desperately struggling.

I want to connect this with the reality that we are shooting ourselves in the foot here. What we know about gifting—there’s actually a graph in one of the documents we were given: you can see there’s a plummet in gifting, and it’s an alarming plummet. What we know is that as times have become tougher, those small donations are harder to get. We’ve also got—ironically, because we have a widening gap between rich and poor—and appetite at the high end to donate, but what we are dealing with there is we are dealing with an ecosystem that’s actually international.

If our settings are so much less generous and less beneficial in terms of getting that money out of high-end donors than Australia, guess what will happen! The very same people will just simply go to where their money is going to do the best, and for good reason. I think if I was in that privileged position, I’d probably be thinking, “Where can I do the most good with my money?”, and if New Zealand cuts the amount at $100,000 and says, “At that point, we are no longer giving you a rebate of 33 percent,” then, actually, wouldn’t you go to Australia, which isn’t going to do that? They will get that there and they’ll be able to serve people in the very same issues, but they’ll be able to serve. If you are a charity in that way, that is a concern.

What our reports say—and we’ve been given a lot of documents, and we’ve gone through them. What they say, what the regulatory impact statement says, is we don’t really have a lot of evidence—that’s what it actually says. The Minister said, “We’ve got evidence”; that’s just not actually correct. It says in those reports we don’t have a lot of evidence. We’re making a lot of assumptions. We haven’t really been able to talk to anyone because this is under Budget urgency, so we’re predicting but we don’t really know. That’s a very, very dangerous context for this, because we could see a plummet in high-end donations, which New Zealand desperately needs.

I went to a really interesting panel the other day, and it was the sector asking the people on every side of this House to come. I heard my colleagues from every other party say that they thought that the work that our charities and philanthropic organisations were doing was really important. There was a lot of gush, basically, about how wonderful they were, and nobody—crickets on this—mentioned that we might be changing the settings without talking to the very people we said we respected. Now we have a dramatic change to those settings that will affect some organisations—because that’s what the regulatory impact statement says: it’s lumpy. Some depend on those high-end donations; others don’t, so we’re not even sure who it’s going to affect. Those organisations woke up yesterday, saw the Budget, and they’re trying to work it out—how is this going to affect us?

I wanted to talk about what the problem was we were trying to solve. That, to me, seems one of the most interesting lessons of having been an MP, is that we constantly miss the mark on trying to solve the problem. Here, there is a problem—the problem is in people avoiding tax by using charitable mechanisms. That is a problem, and it’s not in the interests of our philanthropists or our charitable sector to have that continue, and our obligation is to nail that, to deal with it.

One of the things I know about tax law in New Zealand is we have one of the best settings in the world on tax avoidance. We did that, historically, because in the 1870s, I think, we didn’t have a big population, we didn’t have a big Parliament, and so we created settings that were quite flexible. We said, “If we find it’s avoidance, it’s avoidance,” and we set up a system for challenging it. We have great law that other countries don’t. Sometimes, in other countries, until you call it “avoidance” it’s not—we have to actually have a whole lot of people breach the rules and they get away with it. That doesn’t happen in New Zealand if we do our job. I can see a very good argument for a crack team of people involved from IRD and charitable services dealing with this problem, hitting the nail on the head.

I’m also interested in the issue of controlling entities. It’s quite complicated, but it’s very well worth looking at. I’m less interested, as I explore this, in the issue of religion, and it was raised by the Minister that a lot of these organisations that are giving a lot of money are religions, or they’re giving to religions. I’m not religious, but it’s interesting how much the moral group of motivations that motivate a lot of people to help their communities in charities are actually being undermined here. If religions are doing good things with their money, like feeding our kids when the Government turns its back, by making sure that we have food security—people like the City Mission, for example, in Auckland. They’re incredibly important people at the moment. If they’re doing that with religious purpose, I’m all for it. So I’m not as interested in that, but I’m willing to explore those issues around whether that’s the way that we should target charities.

But this—this is a blunt instrument. This is anyone who gives over $100,000 losing that 33 percent. That is absolutely a disincentive for generosity at a time when New Zealanders desperately need help and the Government is failing on its basic obligations to provide it. Do you know that we have people going to food banks at the moment with both parents in that family working full-time? What kind of society do we get if that happens? We have a problem in this country when a Government is just closing its ears. The next piece of legislation up is about making sure that we punish and scrutinise those on benefits—that is what is going on, and that is where this mind-set is.

We look at the charities and we look at them with some sort of lack of generosity, where we don’t think that they’re doing the right thing, and we don’t look after the people who are—we treat them all like they’re criminals if they actually donate $100,000. On the same day, we make sure that we target people’s upset on people who are actually hurting under this Government. What kind of mind-set does this Government bring to this Budget?

💬 Hon Melissa Lee: You let them sleep in cars last time.

We are in real trouble in this country because of that mind-set. We are absolutely in trouble, and the next time somebody decides to yell at me about people who are living in cars, they need to think about the fact that I see them sleeping in their cars right now—right now. This is not a problem that’s gone away; it is a problem that’s got a lot worse. Thank you.

It is quite enough to hear from ourselves, but let’s hear what people are saying outside. The review comments from Deloitte this morning on the Budget is that the Minister of Revenue, Simon Watts, is actually fixing things—actually fixing the tax system—and, therefore, the National Party is fixing the basics and building the future.

Thank you, Mr Speaker. I just want to start by picking up what the previous speaker said about the people outside: can I just put on the record and say, Deloitte is not “people outside”. In fact, it is far from anything that people outside have genuinely expressed experiencing.

Now, I rise on behalf of Te Pāti Kākāriki. We do support this bill because—well, what can I say about this taxation bill? It’s the first bill out of this year’s Budget, the final Budget for this Government. I would describe it as bland, benign, beige, because it literally doesn’t address any of the issues and any of the problems that the people of Aotearoa are facing today, in a cost of living crisis, in a fuel crisis, when we have sectors where we have major cuts—further cuts—coming to the Public Service. Now, this bill doesn’t address any of that.

In fact, one of the few things that potentially is helpful if you’re looking at the simplification or the removal of some the criteria when it comes to the family scheme income—it doesn’t even take effect until the 2027 financial year. If they really care about the working class and the everyday people of Aotearoa, they would have made major changes sooner. Even for people who are looking at the changes to the family scheme income, they’re not going to be able to start benefiting or will be able to utilise it until 1 April 2028, when they can start making claims and start making those returns for what they are seeing in the 2027/2028 financial year. That is almost two years away, and even then, it’s bland. It increases the threshold from $5,000 to $8,000. That is simply adjusting for inflation since it was last changed in 2011.

There’s nothing in here—much like the Budget. They talk about how much additional money they’re putting into it: into education, into health. A lot of that is not even meeting the inflation, which is currently at 4 percent. Early childhood education got 1.5 percent; the schooling operational fund got 2 percent. That’s still well below 4 percent of the Consumers Price Index. We’re seeing successive Governments continually underfunding all part of the society, then bringing a weak, weak, weak taxation bill like this into the House.

I do want to address the donation tax credit, because I think that is probably an area where the Green Party actually does strongly support, in terms of not so much capping how much people are able to donate. People are always able to donate however much they want. We do agree with the fact that there should be a threshold for how much people are claiming, the threshold now being limited to $100,000. If you look at the tax credit, you’re looking at, possibly, a tax return of no more than $33,000. That is a good thing, because people are using this as a way of gaining additional tax credit.

But here’s the thing. Clearly, as we have heard from the Minister at the committee stage, we’re not over here writing blanket cheques or with an open chequebook for tax cuts for the wealthy, which is deeply ironic, because this is what the Government has been doing consistently over the last 2½ years. By the changes we’re seeing with a donation tax credit, it means that this Government is actually open to a wealth tax and they do understand that the ultra-wealthy in this country should be taxed, but this is the way they choose to do it, rather than genuinely doing what the Greens has always been champion for, which is a wealth tax.

That way, we can, as a country, generate more revenue, because all of this is skirting around the edges, and the revenue that is going to be generated from the tax donation credit is no more than $90 million, according to the Minister. Imagine how much more we can generate if we have a wealth tax in this country. Imagine what we can do to our Public Service and structural deficit in our infrastructure if we have a wealth tax in this country. So the Greens will support this bill, and we hope that the Government, one day, will support a wealth tax.

Motion agreed to.

Bill read a third time.

Regulatory Systems (Internal Affairs) Amendment Bill

Third Reading